I’m a staff writer covering all things Wall Street and Investing. I have a love hate relationship with the world of finance. I am fascinated by the industry’s power and influence around the globe, and the ingenuity of the people it employs. Not so much a fan of the lack of accountability when the system fails—which it often does: I'm always on the hunt for people and companies to profile.

Wells Fargo: The Bank That Works

The solution to the housing crisis could be found in October at the Pennsylvania Convention Center, a three-block-long facility near Philadelphia’s baroque City Hall and otherwise known for hosting that city’s famous flower show and the annual celebration of costumed merrymakers known as Mummers. For two days, financial services giant Wells Fargo, America’s largest residential-mortgage originator, took over 104,000 square feet for one of the 51 “Home Preservation Workshops” it has held over the past three years.

The euphemistically named event is, in reality, a convention of indebted homeowners, mostly those with ­underwater mortgages and foreclosed homes. Rather than wear name badges, the 719 attendees toted around pay stubs, W-2s and mortgage statements and, after decompressing with popcorn and lemonade, met face-to-face with one of 100 or so Wells Fargo “home retention team members,” who, with their own individual booths splayed across the exhibit hall, were ready to provide “on the spot” restructurings, including term extensions and principal ­reductions.

The meetings are strictly confidential, and attendees are understandably sheepish about sharing their plights. But an idea of the private goings-on can be found from a working mother facing foreclosure, “brokeinnj,” who relayed her Philadelphia experience on Loansafe.org, an online clearinghouse for underwater homeowners. Her outcome: a new 40-year mortgage that rolled in the $12,000 that was past due. The drawn-out terms dropped her monthly bill $300, without dropping the 5.625% annual rate the bank charges. “It is a great feeling to not worry about seeing a car sitting in front of your house wondering if they are from the bank looking at your home,” she reported. “When our youngest says how much he loves this home and safe he feels, we don’t have to get a sick stomach from wondering if we will be forced to move.”

Washington has promoted low interest rates as a housing cure-all, while Wall Street cowers in a lawsuit-weary fetal position. For Wells, which has forgiven $4 billion in mortgages since then, rather than hiring PR firms to spin its way out of the mess, the overriding business mission is keeping customers in their homes and regaining the trust of their customers, one by one, face-to-face.

It’s a monumentally larger version of the critical scenes in It’s a Wonderful Life, and Wells Fargo even has its own version of George Bailey/Jimmy Stewart: CEO John Stumpf, who spins out the kind of corny, homespun sayings you might find embroidered and framed on the wall of Aunt Tilly’s lake cabin. “When we hire somebody around here, we want to know how much you care, before we care how much you know,” he says, without the slightest hint of irony as we sit with him at his San Francisco office. “We call our employees team members, not employees. Employees denote an expense to be managed. Team members are an asset to be invested in.”

It’s hard not to be a bit jaded by—and skeptical of—the saccharine homilies. All of Wells Fargo’s 264,200 “team members” receive a 37-page book, Vision & Values signed by Stumpf, full of warmed-over prescriptions for how to behave, treat customers and, above all, increase revenue. But in a field where sayings like “every man for himself” and “eat what you kill” have led to blunders of historic scale, it’s also a welcome departure. As are Wells’ numbers: In the fourth quarter of 2011 Wells Fargo had a return on equity of 12% and an average return on its $1.3 trillion in assets of 1.25%, wildly better than JPMorgan Chase (8% and 0.65%), Bank of America (3% and 0.36%) and Citigroup (2.6% and 0.61%). “It’s nothing like those banks at all,” says Stifel Nicolaus analyst Christopher Mutascio. “It’s more risk-averse, and it doesn’t have the same international or investment banking presence.”

Another difference: It’s worth more. Wells Fargo has the largest market capitalization of any American bank ($161 billion), including JPMorgan Chase, which has twice the assets. The market values Wells above Bank of America, Goldman Sachs and Morgan Stanley—combined.

Let those banks trade wantonly and race to beat each other to marginally profitable investment banking business. Wells does what banks are supposed to do: take deposits and then lend the money back out. Interest margin drives half its revenues. Fees from mortgages, investment accounts and credit cards generate the other half. “I couldn’t care less about league tables,” says Stumpf, throwing out a line ­custom-made for the Wells aphorism book. “I’m more interested in kitchen tables and conference room tables.”

By operating a bank like a bank, Stumpf has at once made Wells exceedingly profitable—for 2011 the bank’s net income jumped 28% to $15.9 billion, on $81 billion in revenue—and extremely safe. Wells originates one in four U.S. mortgages and services one in six, yet its efficiency ratio—the cost required to generate a dollar of revenue—is unrivaled at 56% and compares with 66% for both JPMorgan and Citi, and 86% for Bank of America. And while its competitors follow European news with panicky obsession, there’s no chance of a PIIG contagion here: Foreign loans are a mere 5% of its portfolio. Says Stumpf, referring to the bank’s U.S. focus: “Boy, that’s a basket I love right now.”

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I agree that the staff members I meet in the branches are very positive and helpful. And customers taking out WF loans today are probably very content. However as a Wachovia Home Loan holder I do not think that WF is serving us well as Master Servicer. Hundreds of people are being put through the Loan Modification application process, including at the workshops you describe above, often more than once before being denied. If you are going to praise the workshops I think it is important to ask WF how many of those people – particularly with loans inherited from World Savings and Wachovia ever actually get a modification. Many people are led along for months, and then foreclosed on. If WF wants to get rid of those loans then I think most of us would happily agree to be transferred in to a legitimate WF loan.

As a WF team member, I can only say that everything you said is true. I came from another big bank before joining WF and at first thought the retoric was just that, with a sugar sweet finish; but I quickly found that not to be so. What ever you want to call what Wells Fargo does, it works!

This article appears to be a piece of suckup garbage. “Retrain and Retain”? Are you kidding me? The Wachovia people in this merger were treating like conquered serfs. Glad that the author applauds Stumpf for “only” eliminating 40,000+ jobs. Pretty callous comment if you were one of these people.

Sooo many people out there like you! Mad because someone didnt just drop a job in your lap. I had no problem being “Retained and Retrained” mulitple times now and I work with tons of people that have too. You have to do the work! Sitting around and waiting isnt going to get you a job.

I was a Wachovia employee for 11 years. During my tenure, I was promoted several times and was a Senior Vice President when WF bought us. I have been a stellar employee my whole life, always receiving 5 star performance evaluations. Within a month of the takeover, I received a form letter signed “Manager” saying I had been let go. Nobody at Wells even reached out to find out my qualifications or ask for a resume. I would have been happy to interview for a job but wasn’t even afforded an opportunity. Your comments that I sat around looking for a handout are offbase and until your recent post, nobody has ever questioned my work ethic. I have moved on and have a great job. However, your experience was not the same as 40,000 other people who worked at Wachovia. These were dedicated people who worked hard and were not given the “Retain and Retrain” opportunity you were given. I believe the author has missed this point in her sanctification of Mr. Stumpf.

So if this puff piece story is true, and it’s sadly not in my case, why have I and so many others had such trouble with Wells Fargo?

Here’s my story, here is what REALLY happens.

http://rantrave.com/Rant/Wells-Fargo-One-Lie-After-Another.aspx

I sent in documents to the Kelly Leake on the Home Preservation Team as requested and they were intercepted by Chris Ryan who is in the Office of the President. Keep in mind Chris is the 5th or 6th member of the Office of the President that has handled my case. All of the others did nothing as well.

If you bother to read all the documentation in my RantRave thread about Wells Fargo you will note that I have over 70 e-mail addresses of various Wells Fargo executives including John Stumpf and their Board of Directors, it’s not like they have no idea who I am, it’s that they don’t care. Also if you read through my thread you find links to other people and stories so I’m not alone, no far from it.

Forbes is in bed with Wall Street, so I don’t expect them to publish anything that might actually show the ugly truth about Wells Fargo or any of the other financial institutions that plunged America into this recession. The truth is out there, it’s just not in Forbes.

VA housing loans are guarented by the US govt, I was discharged from the Navy in Jan 1974, never used my VA Housing loan, June 2010 walked into my branch of Wells Fargo told them would like to use my VA Housing loan to buy one of the many $40,000 to 60,000 hoses foreclosed on in Fernley, Nevada. I was told my credit score was 70 points to low.

Since the US govt guarentes VA housing loans why do they require a credit score, how can the bank lose withj the US govt behind the loan

They should just give you the loan and cross their fingers? No sense in looking at your credit which clearly shows if you pay your debt in full and on time. This is one of the reasons we are in this mess. Loans are given to people who are credit worthy and are not a high risk.

This is for grotte13: In regards to your question regarding why Wells Fargo could not lend money to you for a mortgage even though you are a VA borrower – the Dept of Veterans Affairs does not lend the money, the bank or in this case Wells Fargo, lend the money. The VA issues a guaranty to Wells Fargo to protect them against a loss in the instance the veteran does not pay. Wells Fargo is still required to follow lending guidelines. In your case, if your FICO is sub 600, WF could not lend to you. With a FICO that is low, this tells the lender that there is a reason that they shoudl not lend to you. This score acts as your “report card” on your history of paying your debt on time.

I feel obligated to inform the public of the unethical behavior I just encountered with Wells Fargo Mortgage. PLEASE DO NOT GET A MORTGAGE WITH WELLS FARGO; if you have one – change banks! I was laid off 7 months ago and have been living off my husband’s salary and savings. I am current on my mortgage and not been late but with my savings running out I decided to be preemptive and call Wells Fargo to discuss our mortgage options. After all, the Wells Fargo website boasts its willingness to assist homeowners during this downtrodden economy or for those who’s home has lost value. I spoke to a representative who seemed eager to assist me with a short term (6 month) program. He described the monthly payment amounts, the amount due at the end of term, possible escrow analysis and what would be communicated to the credit bureau. All this given I felt confident that Wells Fargo was going to help me. I felt such relief….until I received the paperwork in the mail. The letter mentioned a lot of foreboding information regarding collections and the credit bureau. It also including a statement regarding that they may change my interest rate and the terms of the mortgage. When I called Wells Fargo, I was eventually sent to the collections department! That representative immediately spoke to me as if I was delinquent. During this difficult conversation she mentioned “additional fees”. Fees? I would be charged an additional $60 per month in Late fees, the bank would have my house reassessed and charge me the appraisal fee, plus fees for reviewing the mortgage and so on. Essentially, Wells Fargo would tack another $1000+ if I chose to participate in this program. $1000 that were not disclosed in the original conversation or the paperwork. Only upon asking delving questions was this information given to me. Disgraceful!!! When I then spoke to Dave the Supervisor, he was completely uninterested in discussing this with me and offered up….well Nothing! SHAME ON YOU WELLS FARGO!!! You are taking advantage of people’s difficulties for your own gain. Wells Fargo is an unethical, manipulative company.